This correction was bound to happen, and the small miss in the services PMI provided the fuel: only 57.7 points instead of 58.1 points. The UK services PMI was expected to slide from 58.6 in May to 58.1 points now, reflecting strong growth. This is the last purchasing managers’ index out of three, and also the most important one: it is the largest sector.
GBP/USD traded on high ground just under 1.7150 before the publication and it now dips under 1.7140.
Update: the new low is 1.7133. The miss is minor, but the pound needed a correction.
Looking into the details, we do see a rise in employment from 56.2 to 58.8 points. Markit, which produces the report, estimates a growth rate of 0.8% in Q2, similar to previous quarters.
Both previous PMIs beat expectations: manufacturing came out slightly above predictions while construction surprised with a leap to 62.6 points. Both releases triggered rallies.
Cable had a really strong rally since Carney said that rates could rise faster than expected. However, it might already trade in overbought territory.
The Bank of England makes its decision only next week, and no change is expected in monetary policy.
